Burberry Buys Out Chinese Trading Partner, Aims At Unifying Brand

British Brand Ends 20-Year Partnership With Kwok Hang Holdings

Burberry hopes to have over 100 franchises in China within the next five years

Burberry hopes to have over 100 franchises in China within the next five years

The Guardian reports today that Burberry has bought out its Chinese trading partner, Kwok Hang Holdings, for £70 million (US$107.65 million) as part of the brand’s restructuring efforts. According to the article, Burberry is looking to keep a tight grip on its image as the company pursues even faster growth in “high-growth luxury regions” like China. The company plans to open 10 new stores throughout China this year and — as Jing Daily noted late last year — hopes to double its mainland locations by 2012, so an intensive image unification campaign looks to be a smart strategic move to ensure a consistent brand experience going forward. From the Guardian:

China was an “exciting” market, said [Burberry’s chief executive, Angela Ahrendts], with the deal which takes in 50 stores in 30 cities, providing a platform for growth in a “high-growth luxury region”. The British brand has been on sale in China for 20 years through a franchise partnership with Kwok Hang Holdings and Ahrendts said it was an “optimal time” to take the business in-house. The Chinese chain, which includes nine stores in Beijing and four in Shanghai, made an operating profit of £14m on sales of £75m last year. “We will accelerate growth by further capitalising on nearly 20 years of market presence and our high brand awareness in China,” she added. Burberry plans to open another 10 stores in the region this year. The deal is expected to boost next year’s profits by some £20m and news of the acquisition saw its shares touch a new high of 827.5p in morning trading. “This will allow Burberry to ensure that the brand is presented to consumers in a consistent fashion,” said Evolution Securities analyst Dennis Weber. “Financially the deal is excellent.”